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0000898430-98-004512.txt : 19981228
0000898430-98-004512.hdr.sgml : 19981228
ACCESSION NUMBER: 0000898430-98-004512
CONFORMED SUBMISSION TYPE: SC 13D
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 19981222
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: LEARNING CO INC
CENTRAL INDEX KEY: 0000719612
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372]
IRS NUMBER: 942562108
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0104
FILING VALUES:
FORM TYPE: SC 13D
SEC ACT:
SEC FILE NUMBER: 005-35677
FILM NUMBER: 98773691
BUSINESS ADDRESS:
STREET 1: ONE ATHENAEUM ST
CITY: CAMBRIDGE
STATE: MA
ZIP: 02142
BUSINESS PHONE: 6174941200
MAIL ADDRESS:
STREET 1: ONE ATHENAEUM ST
CITY: CAMBRIDGE
STATE: MA
ZIP: 02142
FORMER COMPANY:
FORMER CONFORMED NAME: SOFTKEY INTERNATIONAL INC
DATE OF NAME CHANGE: 19940210
FORMER COMPANY:
FORMER CONFORMED NAME: WORDSTAR INTERNATIONAL INC
DATE OF NAME CHANGE: 19920703
FORMER COMPANY:
FORMER CONFORMED NAME: MICROPRO INTERNATIONAL CORP
DATE OF NAME CHANGE: 19890618
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: MATTEL INC /DE/
CENTRAL INDEX KEY: 0000063276
STANDARD INDUSTRIAL CLASSIFICATION: DOLLS & STUFFED TOYS [3942]
IRS NUMBER: 951567322
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D
BUSINESS ADDRESS:
STREET 1: 333 CONTINENTAL BLVD
CITY: EL SEGUNDO
STATE: CA
ZIP: 90245
BUSINESS PHONE: 3102522000
SC 13D
1
SCHEDULE 13D
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. _____)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
THE LEARNING COMPANY, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
- -------------------------------------------------------------------------------
(Title of Class of Securities)
522008-10-1
- -------------------------------------------------------------------------------
(CUSIP Number)
Lee B. Essner
Assistant General Counsel and Assistant Secretary
Mattel, Inc.
333 Continental Boulevard
El Segundo, CA 90245-5012
(310) 252-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 13, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [_].
(Continued on the following page)
Page 1 of 13 Pages
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 522008-10-1 PAGE 2 OF 13 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MATTEL, INC.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
WC,BK,OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
STATE OF DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 15,673,160(1)
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
15,065,944(2)(3)
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
15,673,160(1)
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
15,065,944(2)(4)
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
30,739,104(1)(2)(3)
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
26.7%(2)(5)
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- ------------------------------------------------------------------------------
2 of 13
(1) The shares of common stock, par value $.01 per share ("TLC Common Stock"),
of The Learning Company, Inc. ("TLC") covered by this item are purchasable
by Mattel, Inc. ("Mattel") upon exercise of an option granted to Mattel on
December 13, 1998 and described in Item 4 of this Statement. Prior to the
exercise of the option, Mattel is not entitled to any rights as a
stockholder of TLC with respect to the shares of TLC Common Stock covered
by the option. Mattel disclaims any beneficial ownership of the shares of
TLC Common Stock which are purchasable by Mattel upon exercise of the
option on the grounds that the option is not presently exercisable and only
becomes exercisable upon the occurrence of the events referred to in Item 4
of this Statement. If the option is exercised, Mattel would have the
sole right to vote and to dispose of the shares of TLC issued as a result
of such exercise.
(2) As represented by TLC to Mattel in the Agreement and Plan of Merger between
Mattel and TLC, dated as of December 13, 1998, as of December 7, 1998,
there were issued and outstanding (i) 87,073,106 shares of TLC Common
Stock, (ii) 750,000 shares of TLC's Series A Convertible Participating
Preferred Stock, $.01 par value per share (the "TLC Preferred Stock"), and
(iii) one share of special voting stock, par value $1.00 per share (the
"Special Voting Stock"). Each share of TLC Preferred Stock is convertible
into 20 shares of TLC Common Stock and prior to such conversion each share
entitles the holder thereof to 20 votes on all matters submitted for the
vote of the holders of the TLC Common Stock. The 750,000 shares of TLC
Preferred Stock are currently convertible into 15,000,000 shares of TLC
Common Stock. The Special Voting Stock entitles the holder thereof to vote,
together with the holders TLC Common Stock, on all matters submitted for
the vote of the holders of TLC Common Stock. The number of votes
represented by the Special Voting Stock is equal to the number of
outstanding Exchangeable Non-Voting Shares of TLC's subsidiary, SoftKey
Software Products Inc. (the "Exchangeable Shares") (other than Exchangeable
Shares held by TLC, its subsidiaries and its affiliates). As of December 7,
1998, there were 12,580,133 Exhangeable Shares (of which 7,374,942 were
held directly or indirectly by TLC). As of December 7, 1998, an aggregate
of 107,278,297 votes were entitled to be cast on all matters submitted to a
vote of the holders of the TLC Common Stock. The 15,065,944 shares set
forth on lines 8 and 10 consist of: 706,360 shares of TLC Common Stock over
which Mattel has shared voting and depositive power, 694,266 shares of TLC
Preferred Stock (which represents 13,885,320 votes and is convertible into
13,885,320 shares of TLC Common Stock); and 474,264 Exchangeable Shares
(which represent an equal number of votes and is exchangeable into an equal
number of shares of TLC Common Stock).
(3) Pursuant to (i) a stockholder support agreement (the "Directors and Centre
Stockholder Support Agreement"), dated as of December 13, 1998, between
certain directors of TLC, certain stockholders of TLC (listed on the
signature pages thereto) (collectively, the "Director and Centre
Stockholders") and Mattel, the Director and Center Stockholders agreed to
vote 706,360 shares of TLC Common Stock, 474,264 Exchangeable Shares and
121,951 shares of TLC Preferred Stock (convertible into 2,439,020 shares of
TLC Common Stock) over which they have voting power in favor of the Merger
Agreement (as defined in response to Item 4 of this Statement) and the
Merger (as described in the response to Item 4 of this Statement) and, if
requested by Mattel, to grant to Mattel an irrevocable proxy with respect
to such shares for such purpose, and (ii) a stockholder support agreement
(the "Lee and Bain Stockholder Support Agreement" and, together with the
Director and Centre Stockholder Support Agreement, the "Stockholder Support
Agreements"), dated as of December 13, 1998, among certain stockholders of
TLC (as listed on the signature pages thereto) (the "Lee and Bain
Stockholders") and Mattel, the Lee and Bain Stockholders have agreed to
vote the 572,315 shares of TLC Preferred Stock (convertible into 11,446,300
shares of TLC Common Stock) over which they have voting power in favor of
the Merger Agreement (as defined in the response to Item 4) and the Merger
(as defined in the response to Item 4) and, if requested by Mattel, to
grant to Mattel an irrevocable proxy with respect to such shares for such
purpose.
(4) Pursuant to (i) the Director and Centre Stockholder Support Agreement, the
Director and Centre Stockholders may not dispose of the 706,360 shares of
TLC Stock, the 474,264 Exchangeable Shares and the 121,951 shares of TLC
Preferred Stock (convertible into 2,439,020 shares of TLC Common Stock)
that are directly held by them until the consummation of the Merger or the
termination of the Merger Agreement, and (ii) the Lee and Bain Stockholder
Support Agreement, the Lee and Bain Stockholders may not dispose of the
572,315 shares of TLC Preferred Stock (convertible into 11,446,300 shares
of TLC Common Stock) that are directly held by them until the consummation
of the Merger or the termination of the Merger Agreement.
(5) Indicates percentage of class on a fully dilluted basis. See Item 5.
3 of 13
ITEM 1. SECURITY AND ISSUER.
-------------------
This Statement on Schedule 13D (this "Statement") relates to the
common stock, par value $.01 per share ("TLC Common Stock"), of The Learning
Company, Inc., a Delaware corporation ("TLC"). The principal executive offices
of TLC are located at 1 Anthenaeum Street, Cambridge, Massachusetts 02142.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
This Statement is being filed by Mattel, Inc., a Delaware corporation
("Mattel"). The principal business address of Mattel is 333 Continental
Boulevard, El Segundo, California 90245. Mattel is engaged principally in the
toy business.
(a)-(c); (f) The name, business address, present principal occupation
or employment, and the name and principal business of any corporation or other
organization in which such employment is conducted of each of the directors and
executive officers of Mattel is set forth in Schedule I hereto, which is
incorporated herein by reference. Each person listed in Schedule I hereto is a
citizen of the United States.
(d)-(e) During the last five years, neither Mattel nor, to the
knowledge of Mattel, any of the persons listed on Schedule I hereto (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
As more fully described below, pursuant to the terms of the Stock
Option Agreement (as defined in the response to Item 4), Mattel will have the
right, upon the occurrence of certain events specified therein, to purchase from
time to time up to 15,673,160 shares of TLC Common Stock (subject to adjustment
as provided in the Stock Option Agreement) at a price (the "Purchase Price")
equal to the lesser of (i) $28.3125 and (ii) the product of (A) the closing
price of a share of the Mattel's common stock, par value $1.00, per share (the
"Mattel Common Stock"), on the New York Stock Exchange Composite Tape on the
trading day (the "Prior Trading Day") immediately prior to the day on which
Mattel delivers a notice of exercise of the option, multiplied by (B) the
Exchange Ratio (as defined in the response to Item 4) in effect on the Prior
Trading Day. If Mattel purchases TLC Common Stock pursuant to the Stock Option
Agreement, Mattel anticipates that the funds to finance such purchase would come
from a combination of working capital and borrowings, although no definitive
determination has been made at this time as to the source of such funds.
As described in the response to Item 4, (i) the Director and Centre
Stockholders have entered into the Director and Centre Stockholder Support
Agreement, pursuant to which the Director and Centre Stockholders have agreed to
vote 706,360 shares of TLC Common Stock, 474,264 Exchangeable Shares and 121,951
shares of TLC Preferred Stock (convertible into 2,439,020 shares of TLC Common
Stock) over which they have voting power in favor of adoption of the Merger
Agreement and approval of the Merger, and if requested by Mattel, to grant to
Mattel an irrevocable proxy with respect to such shares for such purpose, and
(ii) the Lee and Bain Stockholders have entered into the Lee and Bain
Stockholder Support Agreement pursuant to which the Lee and Bain Stockholders
have agreed to vote
4 of 13
572,315 shares of TLC Preferred Stock (convertible into 11,446,300 shares of TLC
Common Stock) over which they have voting power in favor of adoption of the
Merger Agreement and approval of the Merger, and if requested by Mattel, to
grant to Mattel an irrevocable proxy with respect to such shares for such
purpose. In addition, each of the Director and Centre Stockholders and the Lee
and Bain Stockholders have agreed not to dispose of the shares of TLC Common
Stock held directly by them until the consummation of the Merger or the
termination of the Merger Agreement.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
(a)-(j) On December 13, 1998, Mattel and TLC entered into an Agreement
and Plan of Merger, dated as of December 13, 1998 (the "Merger Agreement"). The
Merger Agreement provides, among other things, for the merger of TLC with and
into Mattel (the "Merger"), with Mattel being the corporation surviving the
Merger (the "Surviving Corporation").
Pursuant to the Merger Agreement, at the Effective Time (as defined in
the Merger Agreement), each share of TLC Common Stock issued and outstanding
immediately prior to the Effective Time (excluding those held in the treasury of
TLC, by any subsidiary of TLC or by Mattel or any subsidiaries of Mattel
(collectively, the "Excluded Shares")) will cease to exist and be converted into
the right to receive a number (the "Exchange Ratio") of shares of Mattel
Common Stock equal to the number determined by dividing $33.00 by a certain
average of certain random closing prices of Mattel Common Stock on the New York
Stock Exchange (the "Average Mattel Price"); provided, however, that (i) if the
number determined by dividing $33.00 by the Average Mattel Price is less than or
equal to 1.0, the Exchange Ratio will be 1.0, and (ii) if the number determined
by dividing $33.00 by the Average Parent Price is 1.2 or higher, the Exchange
Ratio will be 1.2. The Merger Agreement also provides that each Excluded Share
will be canceled and retired without the payment of any consideration therefor.
As a consequence of the Merger, TLC's separate corporate existence will cease.
The TLC Common Stock will be delisted from trading on the New York Stock
Exchange and TLC will no longer be required to file periodic reports under
Section 12(b) of the Act.
Consummation of the Merger is subject to the satisfaction or waiver at
or prior to the Effective Time of certain conditions, including, but not limited
to, approval of the Merger and the Merger Agreement by the holders of shares of
TLC Common Stock, approval of the Merger and the Merger Agreement by the holders
of shares of Mattel Common Stock, expiration or termination of the applicable
waiting periods under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976,
as amended (the "HSR Act"), and various other customary conditions.
Pursuant to the Merger Agreement, (i) the certificate of
incorporation and bylaws of Mattel will be the certificate of incorporation and
bylaws of the Surviving Corporation, (ii) the directors of Mattel immediately
prior to the Effective Time will continue as the directors of the Surviving
Corporation, and (iii) the officers of Mattel immediately prior to the Effective
Time will continue as the officers of the Surviving Corporation.
The Merger Agreement contains certain customary restrictions on the
conduct of the business of TLC pending the Merger, including, without
limitation, not declaring, setting aside or paying any dividend or distribution
payable in cash, stock or property in respect of any capital stock of TLC.
Concurrent with the execution of the Merger Agreement, Mattel and TLC
entered into a Stock Option Agreement, dated as of December 13, 1998 (the "Stock
Option Agreement"). Pursuant to the Stock Option Agreement, TLC granted Mattel
an unconditional, irrevocable option (the "Option") to
5 of 13
purchase, pursuant to the terms and conditions thereof, up to 15,673,160
(subject to adjustment as provided in the Option Agreement) fully paid and
nonassessable shares of TLC Common Stock at the Purchase Price. The Stock Option
Agreement provides that Mattel may exercise the Option in whole or in part at
any time from time to time following the occurrence of a Triggering Event (as
defined below) by delivering a written notice to TLC in accordance with the
terms of the Stock Option Agreement. The right to exercise the Option will
terminate at the earliest of (i) the Effective Time, (ii) the date on which
Mattel realizes a total profit pursuant to the Stock Option Agreement and
Section 8.2 of the Merger Agreement equal to $125 million, (iii) the date on
which the Merger Agreement is terminated if no termination fees (under Section
8.2 of the Merger Agreement) could be payable to Mattel pursuant to the terms of
the Merger Agreement, (iv) if no Triggering Event (as defined below) has
occurred, the date that is twelve months after the termination of the Merger
Agreement, and (v) 180 days following the occurrence of a Triggering Event (the
date referred to in this clause (v) being referred to as the "Option Expiration
Date").
A "Triggering Event" is any of the events giving rise to the
obligation of TLC to pay Mattel the Additional Termination Fee (as defined in
Section 8.2 of the Merger Agreement). Pursuant to the Merger Agreement, the
Additional Termination Fee is payable to Mattel by TLC if:
(i) (A) the Merger Agreement is terminated by Mattel because (1) the
board of directors of TLC fails to recommend approval and adoption of the Merger
Agreement and the Merger by the stockholders of TLC or withdraws or modifies (or
publicly announces an intention to withdraw or modify) in any adverse manner its
approval or recommendation of the Merger Agreement or the Merger, (2) the board
of directors of TLC makes any public recommendation with respect to any
Acquisition Proposal (as defined below) other than a recommendation to reject
such Acquisition Proposal or as may be required to comply with Rule 14e-2 under
the Securities and Exchange Act of 1934, as amended, (3) TLC engages in a
solicitation of an Acquisition Proposal prohibited by Section 6.3 of the Merger
Agreement, or (4) the board of directors of TLC resolves to take any of the
actions specified above; or (B) prior to the meeting of TLC's stockholders duly
convened and held to vote in respect of the Merger Agreement and the Merger, a
bona fide Acquisition Proposal has been made to TLC and made known to its
stockholders generally or has been made directly to its stockholders generally,
or any person has publicly announced an intention to make a bona fide
Acquisition Proposal, and thereafter (x) the Merger Agreement is terminated by
reason of the failure of the stockholders of TLC to approve the Merger Agreement
or the Merger at such meeting, or (y) the Merger Agreement is terminated by
Mattel by reason of a breach by TLC of its covenants or agreements under the
Merger Agreement; and
(ii) within 12 months of the termination of the Merger Agreement as
set forth in clause (i), TLC enters into an agreement with any person with
respect to an Acquisition Proposal or an Acquisition Proposal is consummated.
"Acquisition Proposal" means any proposal or offer from any third
party relating to any (i) direct or indirect acquisition or purchase of a
business of TLC or any of its subsidiaries, that constitutes 20% or more of the
consolidated net revenues, net income or assets of TLC and its subsidiaries,
(ii) direct or indirect acquisition or purchase of 20% or more of any class of
equity securities of TLC or any of its subsidiaries whose business constitutes
20% or more of the consolidated net revenues, net income or assets of TLC and
its subsidiaries, (iii) tender offer or exchange offer that if consummated would
result in any third party beneficially owning 20% or more of the capital stock
of TLC, or (iv) merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving TLC or any of its
subsidiaries whose business constitutes 20% or more of the consolidated net
revenues, net income or assets of TLC and its subsidiaries.
6 of 13
TLC has agreed that at any time after a Triggering Event occurs and
prior to an Option Expiration Date, it will, if requested by Mattel, as promptly
as practicable, prepare and file a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), covering any or all shares of
TLC Common Stock issued and issuable pursuant to the Option. Mattel has the
right to make two such demands.
If Mattel, at any time prior to the earlier of (a) the occurrence of
a Change in Control Event (as defined below) or (b) the second anniversary of
the termination of the Merger Agreement, seeks to sell all or any part of the
shares of TLC Common Stock received pursuant to the exercise of the Option (the
"Shares") (i) in a transaction registered under the Securities Act (other than
in a registered public offering in which the underwriters are instructed to make
a broad public distribution) or (ii) in a transaction not required to be
registered under the Securities Act (other than in a transfer (a) by operation
of law upon consummation of a merger or (b) as a result of which the proposed
transferee would own beneficially not more than 2% of the outstanding voting
power of TLC), Mattel shall give TLC the opportunity to purchase such Shares at
the same price Mattel would receive upon the proposed sale of the Shares.
"Change in Control Event" will be deemed to have occurred if (i) any
person has acquired beneficial ownership of more than 50% (excluding the shares
issued pursuant to the Option) of the outstanding shares of TLC Common Stock or
(ii) TLC has entered into an agreement, including without limitation an
agreement in principle, providing for a merger or other business combination
involving TLC or the acquisition of 30% or more of the assets of TLC and its
subsidiaries, taken as a whole.
If a Change in Control Event has not occurred prior to the first
anniversary of the date on which the Option terminates, then beginning on such
anniversary date, and continuing for a period of 30 days thereafter, TLC will
have the right to purchase (the "Repurchase Right") all, but not less than all,
of the Shares at the greater of (i) the Purchase Price, or (ii) the average
closing price of the TLC Common Stock on the New York Stock Exchange Composite
Tape for the five trading days ending five days prior to the date TLC gives
written notice of its intention to exercise the Repurchase Right. If TLC does
not exercise the Repurchase Right within the thirty day period following the
first anniversary of the date on which the Option terminates, the Repurchase
Right will terminate.
Notwithstanding any other provision of the Stock Option Agreement, the
Option may not be exercised so as to result in a Total Profit (as defined in the
Stock Option Agreement) derived from shares acquired pursuant to the Option and
the termination fees under the Merger Agreement, that exceeds $125 million.
Concurrent with the execution of the Merger Agreement and the Stock
Option Agreement, Mattel also entered into (i) the Director and Centre
Stockholder Support Agreement with the Director and Centre Stockholders, (ii)
the Lee and Bain Stockholder Support Agreement with the Lee and Bain
Stockholders. Pursuant to the Director and Centre Stockholder Support Agreement
and the Lee and Bain Stockholders Stockholder Support Agreement, each of
Director and Centre Stockholders and the Lee and Bain Stockholders,
respectively, have agreed to vote, or if applicable, give consents with respect
to, the 706,360 shares of TLC Common Stock, the 474,264 Exchangeable Shares and
the 121,951 shares of TLC Preferred Stock (convertible into 2,439,020 shares of
TLC Common Stock) held by the Director and Centre
7 of 13
Stockholders and the 572,315 shares of TLC Preferred Stock (convertible into
11,446,300 shares of TLC Common Stock) held by the Lee and Bain Stockholders
(collectively, the "Subject Shares"), in favor of the Merger Agreement and the
Merger, and if requested by Mattel, to grant to Mattel an irrevocable proxy with
respect to the Subject Shares for such purpose. In addition, each of the
Director and Centre Stockholders and each of the Lee and Bain Stockholders has
agreed not to dispose of the Subject Shares until the consummation of the Merger
or the termination of the Merger Agreement.
The foregoing summaries of the Merger Agreement, the Stock Option
Agreement, the Director and Centre Stockholder Support Agreement and the Lee and
Bain Stockholder Support Agreement do not purport to be complete and are
qualified in their entirety by reference to the text of such agreements, which
are incorporated herein by reference in their entirety.
Except as set forth in this Statement, the Merger Agreement, the Stock
Option Agreement, the Director and Centre Stockholder Support Agreement or the
Lee and Bain Stockholder Support Agreement, neither Mattel nor, to the best of
Mattel's knowledge, any of the individuals named in Schedule I hereto has any
plans or proposals which relate to or which would result in or relate to any of
the actions specified in subparagraphs (a) through (j) of Item 4 of Schedule
13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
(a) - (b) By reason of its execution of the Stock Option Agreement,
Mattel may be deemed to have beneficial ownership of, and sole voting and
dispositive power with respect to, the shares of TLC Common Stock subject to the
Option and, accordingly, might be deemed to beneficially own 15,673,160 shares
of TLC Common Stock as a result of the Stock Option Agreement. Based on the
number of shares of TLC Common Stock subject to the Option, Mattel may be deemed
to beneficially own approximately 12.7% of the outstanding TLC Common Stock on a
fully dilluted basis (based upon (i) the 87,073,106 shares of TLC Common Stock,
the 750,000 shares of TLC Preferred Stock (convertible into 15,000,000 shares of
TLC Common Stock) and the 5,205,191 Exchangeable Shares (exchangeable into
5,205,191 shares of TLC Common Stock), outstanding on December 7, 1998, as
represented to Mattel by TLC in the Merger Agreement, plus (ii) an additional
15,673,160 that TLC will issue to Mattel in the event that the Option is
exercised, but excluding stock options or other securities convertible or
exercisable for TLC Common Stock) following the exercise in whole of the Option
for 15,673,160 shares of TLC Common Stock. However, Mattel expressly disclaims
any beneficial ownership of the shares of TLC Common Stock which are purchasable
by Mattel upon exercise of the Option, on the grounds that the Option is not
presently exercisable and only becomes exercisable upon the occurrence of the
events referred to in Item 4 above. If the Option were exercised, Mattel would
have the sole right to vote and to dispose of the shares of TLC issued as a
result of such exercise.
In addition, pursuant to (i) the Director and Centre Stockholder
Support Agreement, the Subject Shares held by the Director and Centre
Stockholders may be deemed to be beneficially owned by the Director and Centre
Stockholders and Mattel; and (ii) the Lee and Bain Stockholder Support
Agreement, the Subject Shares held by the Lee and Bain Stockholders may be
deemed to be beneficially owned by the Lee and Bain Stockholders and Mattel.
Based on the number of shares of TLC Common Stock, TLC Preferred Stock and
Exchangeable Shares subject to the Stockholder Support Agreements, Mattel may be
deemed to beneficially own approximately 14.0% of the outstanding TLC Common
Stock as a result of the Stockholder Support Agreements (based upon the
87,073,106 shares of TLC Common Stock, the 750,000 shares of TLC Preferred Stock
(convertible into 15,000,000 shares of TLC Common Stock) and the 5,205,191
Exchangeable Shares (exchangeable into 5,205,191 shares of TLC Common Stock),
outstanding on December 7, 1998, as represented to Mattel by TLC in the Merger
Agreement).
Insomuch as the Director and Centre Stockholder Support Agreement is
limited to the vote of the Subject Shares held by the Director and Centre
Stockholders with respect to the Merger Agreement and the Merger, the Director
and Centre Stockholders and Mattel may be deemed to have
8 of 13
shared power to vote or to direct the vote with respect to the Subject Shares
held by the Director and Centre Stockholders. The Director and Centre
Stockholders may not dispose of the 706,360 shares of TLC Common Stock, 474,264
Exchangeable Shares and the 121,951 shares of TLC Preferred Stock (convertible
into 2,439,020 shares of TLC Common Stock) that constitute the Subject Shares
held by the Director and Centre Stockholders, and because the covenant may be
waived by Mattel, the Director and Centre Stockholders and Mattel may be deemed
to have shared power to dispose or direct the disposition of the Subject Shares
held by the Director and Centre Stockholders (until the consummation of the
Merger or the termination of the Merger Agreement).
Insomuch as the Lee and Bain Stockholder Support Agreement is limited
to the vote of the Subject Shares held by the Lee and Bain Stockholders with
respect to the Merger Agreement and the Merger, the Lee and Bain Stockholders
and Mattel may be deemed to have shared power to vote or to direct the vote with
respect to the Subject Shares held by the Lee and Bain Stockholders. The Lee
and Bain Stockholder Support Agreement also provides that, subject to certain
exceptions, the Lee and Bain Stockholders may not dispose the 572,315 shares of
TLC Preferred Stock (convertible into 11,446,300 shares of TLC Common Stock)
that constitute the Subject Shares held by the Lee and Bain Stockholders and
because the covenant may be waived by Mattel, the Lee and Bain Stockholders and
Mattel may be deemed to have shared power to dispose or direct the disposition
of the Subject Shares (until the consummation of the Merger or the termination
of the Merger Agreement).
(c) Neither Mattel nor, to the best of Mattel's knowledge, any of the
individuals named in Schedule I hereto, has effected any transaction in TLC's
Common Stock during the past 60 days.
(d) So long as Mattel has not exercised the Option (and prior to the
consummation of the Merger), Mattel does not have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
any shares of TLC Common Stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
------------------------------------------------------
Except as provided in the Merger Agreement, the Stock Option
Agreement, the Director and Centre Stockholder Support Agreement or the Lee and
Bain Stockholder Support Agreement or as set forth in this Statement, neither
Mattel nor, to the best of Mattel's knowledge, any of the individuals named in
Schedule I hereto has any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of TLC, including, but not limited to, transfer or voting of any of
the securities, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit 1. Agreement and Plan of Merger, dated as of December 13, 1998,
among Mattel, Inc. and The Learning Company, Inc. Incorporated
by reference to Exhibit 2.1 of Mattel, Inc.'s current report on
Form 8-K, dated December 15, 1998, SEC No. 001-05647.
9 of 13
Exhibit 2. Stock Option Agreement, dated as of December 13, 1998, between
Mattel, Inc. and The Learning Company, Inc. Incorporated by
reference to Exhibit 99.1 of Mattel, Inc.'s current report on
Form 8-K, dated December 15, 1998, SEC No. 001-05647.
Exhibit 3. Stockholder Support Agreement, dated as of December 13, 1998,
between Mattel, Inc. and the stockholders listed on the
signature page thereto. Incorporated by reference to Exhibit
99.2 of Mattel, Inc.'s current report on Form 8-K, dated
December 15, 1998, SEC No. 001-05647.
Exhibit 4. Stockholder Support Agreement, dated as of December 13, 1998,
between Mattel, Inc. and the stockholders listed on the
signature page thereto. Incorporated by reference to Exhibit
99.3 of Mattel, Inc.'s current report on Form 8-K, dated
December 15, 1998, SEC No. 001-05647.
10 of 13
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: December 22, 1998 MATTEL, INC.
By: /s/ Lee B. Essner
______________________
Name: Lee B. Essner
Title: Assistant General Counsel
and Assistant Secretary
11 of 13
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF MATTEL, INC.
The name, present principal occupation or employment, and the name of
any corporation or other organization in which such employment is conducted, of
each of the directors and executive officers of Mattel, Inc. ("Mattel") is set
forth below. Each of the directors and executive officers is a citizen of the
United States. Unless otherwise indicated below, the business address of each
director and executive officer is Mattel, Inc., 333 Continental Boulevard, El
Segundo, California 90245.

13 of 13
EXHIBIT INDEX
Exhibit 1. Agreement and Plan of Merger, dated as of December 13, 1998, between
Mattel, Inc. and The Learning Company, Inc. Incorporated by
reference to Exhibit 2.1 of Mattel, Inc.'s current report on Form 8-
K, dated December 15, 1998, SEC No. 001-05647.
Exhibit 2. Stock Option Agreement, dated as of December 13, 1998, between
Mattel, Inc. and The Learning Company, Inc. Incorporated by
reference to Exhibit 99.1 of Mattel, Inc.'s current report on
Form 8-K, dated December 15, 1998, SEC No. 001-05647.
Exhibit 3. Stockholder Support Agreement, dated as of December 13, 1998,
between Mattel, Inc. and the stockholders listed on the signature
page thereto. Incorporated by reference to Exhibit 99.2 of Mattel,
Inc.'s current report on Form 8-K, dated December 15, 1998, SEC No.
001-05647.
Exhibit 4. Stockholder Support Agreement, dated as of December 13, 1998,
between Mattel, Inc. and the stockholders listed on the signature
page thereto. Incorporated by reference to Exhibit 99.3 of Mattel,
Inc.'s current report on Form 8-K, dated December 15, 1998, SEC No.
001-05647.
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